Bridging the gap between urbanisation and economic growth

Bridging the gap between urbanisation and economic growth

Rapid urbanisation across Africa presents an opportunity for increased industrialisation and development on the continent, but governments will need plans and integrated strategies if they want urbanisation to lead to growth, said Takyiwaa Manuh, director of the ECA’s Social Development Policy Division on Sunday.

“We know that in less than 20 years more than half of our population will be living in urban areas,” said Manuh in a discussion on urbanisation and industrialisation in Africa. While Africa’s urbanisation rate second only to Asia, many countries lack the policies to harness the phenomenon for positive development.

“The time to act is now. Much of Africa’s urbanisation is yet to take place,” continued Manuh. “If the continent waits to be more than 50% urban it might be too late to reverse the unsustainable pathways.”

In Africa, urbanisation hasn’t been accompanied by industrialisation. Currently, 40% of Africa’s population is urban, up from 8% a century ago. Yet many countries have failed to industrialise and continue to rely on resource extraction. Between 1980 and 2014, Africa’s GDP growth per capita compared to urbanisation rates was extremely low compared to other regions.

HE Arkebe Equbay Policy Advisor to the Prime Minister of Ethiopia said that development is not just about economic growth, but also about social inclusion. “Urbanisation can be healthy”, he said, and when characterised by effective urban planning, it can lead to productive cities, innovation hubs and growth.

Urban growth still has much to offer industrialisation, said Manuh. A larger number of firms closer together can produce intermediate products leading to cost reductions. It promotes the better matching of skills to workers, can increase productivity, and allow workers and industries to learn from each other.

But countries and cities need to link their urbanisation and industrialisation plans. “In many ways, I think the type of urbanisation we’re seeing in Africa is a reflection of failed development policy,” said Dr Yaw Ansu, Africa Centre for Economic Transformation’s chief economist. He added:” Urbanisation in Africa is characterised by lack of jobs and slums, driven by the absence of jobs in rural areas. The type of urbanisation is undesirable as it is led by push and pull factors and the growth of cities has become the growth of slums.

Jean Bakole, regional director of the UN Industrial Development Organisation said there is a need to rethink the issues. “Urbanisation can no longer be stopped,” he said. “There is a huge gap between urban growth and economic growth in our countries and today we must ensure that this gap is breached.”

Ibrahim Assane Mayaki, CEO of the New Partnership for Africa’s Development and former prime minister of Niger, said industrialisation influences all other policies sectors so it is crucial for states to follow an integrated plan. Professor Simon Roberts, executive director at the Centre for Competition, Regulation and Economic development at the University of Johannesburg, noted how important it is for cities to take responsibility for plans and promote industrialisation for clusters, quarters and linkages, which he said are “the heart of industrial policy”.

Urbanisation has often been linked to the spread of slums and urban unemployed and those speaking on Sunday said there are a host of challenges facing cities and governments. In crafting urbanisation plans, crucial issues are sustainability, delivering inclusive services, developing functional public transport systems, fiscal management, and ensuring rural areas and agriculture are not neglected.

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